HCP, Inc. (HCP): Higher Rentals For This REIT

Competition

The company competes with other competitors investing in real estate serving the healthcare industry of the US, including Health Care REIT, Inc. (NYSE:HCN) and Ventas, Inc. (NYSE:VTR).

Health Care REIT is a real estate investment trust that provides a full spectrum of senior housing and health care real estate, including medical office buildings, hospitals, and facilities for skilled nursing. The company has a competitive advantage of constructing a diversified property portfolio by type, customer, and geographic location. The company has the largest concentration of properties in New Jersey and California, each 10% of the entire real property held by HCN. The company generates stable cash flows predominantly from private pay sources in markets with strong demographics. The stock is offering a dividend yield of 5%, while it has a history of dividend increases. Most recently in February 2013, it increased its dividend 4% to $0.77 per share.

Ventas is another diversified giant in the US healthcare REIT space. The company grew three times in a short period, and has a presence in Canada and the US. The company has a history of dividend increases, currently yielding 3.7%, while it is engaged in a number of acquisitions. The company is scheduled to report its fourth quarter performance on Feb. 15, 2013.

Conclusion

I am bullish on HCP as the company has continued to increase its dividends for the 28^th consecutive year and presents potential for capital appreciation. The stock is currently offering a dividend yield of 4.44% and trading at 25.4 times its earnings, compared to 124 times for HCN and 50 times for VTR.

The article Higher Rentals For This REIT originally appeared on Fool.com and is written by Adnan Khan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.